June 14, 2011

COFCO, China's largest oils and food importer and exporter, is to further strengthen the control of China Mengniu Dairy Co Ltd, a leading manufacturing and distribution company of dairy products and ice cream in the nation.

Mengniu founder Niu Gensheng, who resigned nearly two years after the Chinese food giant joined in, was succeeded by COFCO Chairman Ning Gaoning.

As COFCO was not very familiar with the dairy business previously, it allowed the original management team to run the firm, sources said. After two years of cooperation, it is time for COFCO to appoint the board chairman of Mengniu, an insider said.

In July 2009, COFCO established a 70-30 joint venture with Hopu Investment to subscribe for new shares in Mengniu and buy existing shares from the old shareholders to take a stake making up 20% of the enlarged capital stock of Mengniu to become the largest shareholder.